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Discount funds raise competition concerns about Microsoft

Marc Ferranti, IDG News Service   Today’s Top Stories    or  Other Legislation/Regulation Stories  
 

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May 16, 2003 (IDG News Service) -- News about special funds used by Microsoft Corp. to offer discounts on software and services has caused some concern among government officials and regulators but is unlikely to affect current antitrust cases and inquiries, according to legal analysts and people involved in the proceedings.
However, the discounts do raise the question of whether antitrust cases thus far have changed Microsoft's anticompetitive behavior, and they bear further scrutiny, they said.
An article yesterday in the International Herald Tribune (IHT) and its sister newspaper, The New York Times, reported that Orlando Ayala, then Microsoft's worldwide sales manager, sent e-mail last July authorizing company officials to draw from special funds in order to win over customers who looked likely to choose open-source Linux software over Windows (see story).
"Under NO circumstance lose against Linux," the IHT quoted Ayala's e-mail as saying.
In response to the article, the European Commission is considering whether to order Microsoft to hand over the e-mail, sources close to the commission said yesterday (see story). The commission, the European Union's executive body, is currently pursuing an antitrust case against Microsoft.
Microsoft officials acknowledge the existence of "business investment" programs that are used to give discounts, particularly to institutions in developing countries, and to make competitive offers on consulting services. But the programs didn't originate specifically to undercut deals offered by Linux vendors, according to Microsoft spokesman Jim Desler, based in Redmond, Wash.
For example, the company's Education and Government Incentive Program is focused on low-income countries, Desler said. "It provides access to technology and software for governments and institutions that don't have IT funding," he said.
Microsoft also has "discretionary funds available to use for certain purposes," Desler said. "These business investment funds have been used in response to major companies dropping prices for services and consulting.
"These programs were developed with customers in mind, and we have a legal team to make sure they comply with laws and regulations," he said. Microsoft has an ongoing dialogue with officials in the U.S. to ensure compliance with the settlement reached last year in the U.S. government's antitrust case against the company, he noted.

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